w
w
ap
eP
m
e
tr
.X
w
om
.c
s
er
Cambridge International Examinations
Cambridge Ordinary Level
7100/12
COMMERCE
Paper 1 Multiple Choice
May/June 2014
1 hour
Additional Materials:
*5823604486*
Additional Materials:
(not provided by CIE)
Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)
Ruler
Protractor
READ THESE INSTRUCTIONS FIRST
Write in soft pencil.
Do not use staples, paper clips, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided
unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.
There are forty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.
Read the instructions on the Answer Sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
The businesses described in this question paper are entirely fictitious.
This document consists of 11 printed pages and 1 blank page.
IB14 06_7100_12/2RP
© UCLES 2014
[Turn over
2
1
The diagram shows an industrial building.
For what is this building most suitable?
2
A
manufacturing goods from raw materials
B
protecting goods from theft and damage
C
selling products to customers
D
storing dutiable goods
Deep Velvet is a luxury chocolate brand.
In what way does the manufacturer of Deep Velvet add value to the chocolates?
3
4
A
advertising the chocolates for sale
B
displaying the chocolates at point of sale
C
investing in machinery to produce the chocolates
D
making quality chocolates and packaging them
Why do some retailers buy directly from manufacturers?
A
Many retailers want to buy in small quantities.
B
Retailers may require urgent deliveries.
C
Some retailers may need regular local supplies.
D
These retailers have their own warehouses.
How might customers benefit from loyalty cards provided by retailers?
A
Bonus points can be collected to exchange later for goods.
B
Customers can make payments in monthly instalments.
C
They are accepted in more than one type of store.
D
They provide purchasing information for retailers.
© UCLES 2014
7100/12/M/J/14
3
5
The picture shows part of the packaging of a product.
What is shown in the picture?
6
A
barcode
B
brand
C
guarantee
D
receipt
Ahmed has seen an advertisement for a computer. It includes the words ‘credit terms available’.
Which statement explains why he is interested in buying the computer shown in the
advertisement?
7
A
Cash vouchers will be offered to him.
B
His money will be refunded if he finds he cannot use the computer.
C
Payment for the computer can be spread over time.
D
The price will be reduced if he pays cash when he buys the computer.
Mrs Khan has a credit card. Her statement for April is shown below.
$
1 April opening balance
500
12 April purchase
120
20 April payment
250
30 April interest charge
40
What is the opening balance on 1 May?
A
8
$290
B
$370
C
$410
D
$910
A shopkeeper must exchange goods when
A
a shopper does not want the goods after they have been paid for.
B
a shopper prefers another item after the goods have been paid for.
C
goods are deliberately damaged just after they have been bought.
D
goods have faults but are supposed to be in perfect condition.
© UCLES 2014
7100/12/M/J/14
[Turn over
4
9
The wholesaler is not likely to be needed in the distribution of
A
books.
B
bread.
C
canned foods.
D
clothing.
10 Which service is provided by wholesalers to manufacturers?
A
forecasting the likely changes in the market
B
giving information on record-keeping
C
operating a cash and carry facility
D
providing a wide range of goods
11 The diagram shows four different intermediaries a manufacturer, Salmon & Company, could use
to export its products.
agent
merchant
Salmon & Company
broker
factor
Which activity applies only to a merchant when preparing to export Salmon & Company’s
products?
A
arranging necessary transport to carry products to other countries
B
buying the products before selling them for profit
C
finding and dealing with creditworthy buyers in other countries
D
providing suitable warehousing while the products await export
12 What is the function of a Customs Authority?
A
collecting statistical information on imports and exports
B
deciding on changes in the rates of customs duties to be charged
C
maintaining port and airport facilities
D
providing warehousing for seasonal goods
© UCLES 2014
7100/12/M/J/14
5
13 Which document is widely used between buyers and sellers in home trade?
A
bank statement
B
bill of lading
C
delivery note
D
proposal form
14 Which document is used to request payment from customers who buy on credit?
A
advice note
B
credit note
C
quotation
D
statement of account
15 A wholesaler has the following rates of trade discount.
%
0-500 units
20
501-1000 units
25
1001-1500 units
30
A retailer secures a reduction of $3.75 from an article’s list price of $15.
What was the size of the order?
A
450 units
B
800 units
C
1200 units
D
2000 units
16 A school’s monthly statement from a bookseller received on 7th May shows that it owes $800. The
cash discount terms are 5% two weeks, 2.5% one month. The account is settled on 28th May.
How much cash discount is given?
A
$20
© UCLES 2014
B
$40
C
$760
7100/12/M/J/14
D
$780
[Turn over
6
17 Why might a company benefit from international trade?
A
It can charge import duties on foreign goods and services.
B
It can expand its trade in the home market.
C
It can export goods and services into a larger market.
D
It can increase the country’s Balance of Payments.
18 Why does a trader exporting goods to another country have more difficulties than a trader selling
in the home market?
A
Countries are becoming less dependent on one another.
B
Excise duties have to be paid on goods leaving the country.
C
Quotas on goods may be imposed by the importing country.
D
The goods need to be stored for six months before sale.
19 Why might advertising lead to lower prices?
A
Advertising costs are deducted from product prices.
B
Competition with other manufacturers might be reduced.
C
Costs of advertising are lower than production costs.
D
Increased sales can reduce unit costs of production.
20 The diagram shows an advertisement.
GOVERNMENT HEALTH DEPARTMENT
KEEP HEALTHY BY EATING FRUIT DAILY
These contain vitamins, minerals and are low in calories.
Which type of advertising is shown in the advertisement?
A
collective
B
competitive
C
informative
D
persuasive
© UCLES 2014
7100/12/M/J/14
7
21 What is the most appropriate form of advertising for a small shop?
A
cinema
B
flyer
C
national radio
D
television
22 Which of the following is an example of sales promotion?
A
Chewy Sweets
B
Danger – electricity
C
Drink Tea
D
Free Gift
23 Which telecommunications method allows users to access information world-wide?
A
Internet
B
intranet
C
videoconferencing
D
voicemail
24 A customer in Pakistan wishes to inform his UK supplier immediately that a recent delivery was
not up to the quality expected.
What would be the most appropriate method of communication?
A
email
B
pager
C
surface mail
D
teleconferencing
25 Which postal service would a large retail outlet use to send monthly statements to its customers?
A
business reply service
B
express post
C
letter post
D
registered post
© UCLES 2014
7100/12/M/J/14
[Turn over
8
26 5000 copies of a best-selling book have been reprinted and need to be taken urgently from
Singapore to New York.
What is the most suitable method of transport the publisher could use?
A
container ship
B
freight forwarder’s cargo plane
C
goods train
D
low-cost airline
27 Which factor might limit the growth of air transport?
A
demand for lighter goods
B
fear of global warming
C
risk of terrorist attack
D
speed of journey
28 For each additional day that vegetables are kept in warehouses,
A
costs of warehousing are reduced.
B
more profit is gained on the capital employed.
C
the risk of wastage increases.
D
the vegetables increase in value.
29 Which statement about a bonded warehouse is correct?
A
Goods can be manufactured while they are in the bonded warehouse.
B
Imported goods are stored in the bonded warehouse until their duty is paid.
C
Imported goods on which duty has been paid are stored in the bonded warehouse.
D
Seasonal goods are stored in the bonded warehouse until they are demanded.
30 What is the contract between the insurance company and the insured called?
A
the policy
B
the proposal
C
the prospectus
D
the quotation
© UCLES 2014
7100/12/M/J/14
9
31 Four people work in the insurance industry.
Which person would be working as an insurance broker?
A
B
I assess the policies of
several companies and advise
my clients on the best for
their needs.
I decide whether or not my
company should accept
the risk given on the
proposal form.
D
C
I inspect goods and properties
after a claim to see if the claim
is valid.
I work for Starlight Insurance.
I sell their policies and I am
paid a salary.
32 When a claim is agreed by an insurance company, the insured usually pays the first portion of
what is due.
Which term is used for such a payment?
A
compensation
B
excess
C
premium
D
subrogation
33 Internet banking is widely used because customers can
A
carry out transactions without any danger of fraud.
B
obtain cash through the Internet.
C
pay in cash and cheques.
D
use banking services at any time.
34 What is an advantage of a bank current account?
A
A high interest rate is earned on money deposited.
B
A minimum amount must be kept in the account.
C
An overdraft may be possible.
D
It is a means of long-term saving.
© UCLES 2014
7100/12/M/J/14
[Turn over
10
35 A letter of credit ensures that goods involved in international trade have had
A
customs duties paid.
B
insurance arranged.
C
payment guaranteed.
D
their quality checked.
36 A bank statement for Miss Chang is shown below. Part of the entry for 13th May is missing.
Bank of Asia
Statement for Miss Chang
Paid in
Paid out
Balance
1st May
Balance
7th May
Cheque
9th May
DD
13th May
Cheque
15th May
Cheque
$130
$60
27th May
Cash
$250
$310
$560
$300
$860
$180
$680
$70 O/D
What is the correct entry for 13th May?
A
$610 paid in
B
$610 paid out
C
$750 paid in
D
$750 paid out
37 Which of the four organisations is in the public sector?
© UCLES 2014
A
B
Global Enterprises
Insurance Division
Government Broadcasting
Services
C
D
Super Metropolitan
International Finance Division
Wizard Worldwide Production
Advertising Department
7100/12/M/J/14
11
38 A public limited company may raise more capital by
A
arranging for a bank overdraft.
B
delaying payment of bills.
C
getting a short term loan from the bank.
D
issuing ordinary shares.
39 For which purpose would a bank manager offer a loan rather than an overdraft to a small-scale
retailer?
A
buying stock which a wholesaler is offering at a bargain price
B
leasing two new delivery vans for the business
C
paying for some advertising leaflets
D
purchasing larger premises nearer to the city centre
40 The diagram shows a company’s assets and liabilities.
LIABILITIES
ASSETS
buildings
$180 000
vehicles
$20 000
debtors
$9000
creditors
$18 000
stock
$40 000
cash
$11 000
What is the company’s working capital?
A
$2000
© UCLES 2014
B
$7000
C
$9000
7100/12/M/J/14
D
$22 000
overdraft
$20 000
loan
$150 000
12
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
© UCLES 2014
7100/12/M/J/14